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The Institute of Economic Development (IED), has published its response to a call for evidence on the new UK Shared Prosperity Fund (UKSPF), which will replace the current EU Structural Funds following Brexit in March 2019 and is “specifically designed to reduce inequalities between communities” and to “help deliver sustainable, inclusive growth”. The questions asked by the All-Party Parliamentary Group on Post-Brexit Funding for Nations, Regions and Local Areas covered the overall UKSPF budget, allocations across the country, activities to be supported and management of the fund.

Firstly, responses were invited on what would be an appropriate annual budget for the UKSPF. “The IED’s view is that any amount less than the current budget, which had been slashed as a result of accession state entry, would be a backwards step in a country with severe issues of balance between the most and least deprived,” explained IED Executive Director Nigel Wilcock. “We have called for at least a three-year funding settlement to allow for any planning and suggested it would be appropriate to roll in other budget lines into the UKSPF, such as the Local Growth Fund for England, which could simplify the approach. In fact, the formula for redistributing business rates could also be usefully rolled into the overall approach as well as long as this isn’t a way of diluting total funding.”

The second section explored how the UKSPF should be divided up between the UK’s four nations. “By some formula relating to population and disposable income – and allocations within the devolved nations should be an entirely devolved matter,” Nigel said. “In England, funding could also be allocated by a measure based on population and the Indices of Multiple Deprivation, if an alternative approach is needed. There is no place for competitive bidding between areas for funding which takes up a huge amount of taxpayer-funded time and resource. Of course, ill-prepared plans could be sent back for more detail but competitive bidding damages cross-boundary relations and is an inefficient use of taxpayer’s money. We also think that sub-regions (e.g. LEP areas, combined authorities) should be the basis for financial allocations. This isn’t really the way in which things work at the moment because the Ministry of Housing, Communities and Local Government has the control and influence, but there is no other mechanism other than LEP areas. This is the area of economic geography for other policies and this link should be strengthened.”

Questions were then posed on whether economic development and convergence should remain the primary objectives of the new UKSPF. “Yes,” Nigel insisted. “And rebalancing the economy should be a measured objective to ensure that we continue to strive to use the scarce taxpayer-funded resources in the UK economy more equally and therefore more effectively. The UK has a significant issue in this regard with pressure on public resources in the South East and under-used capacity elsewhere. We feel that the fewer objectives, the clearer the position becomes for future funding mechanism – it is not clear that the European programme was generally seen as a convergence measure across public authorities in the UK.”

Finally, responses were sought on the management of the UKSPF, and whether the UK government should set the broad guidelines for the priorities to be supported by it. “There is no other body in a position to do so,” Nigel said. “There are then two choices. Either the Shared Prosperity allocation is part of the general budget settlement to devolved administrations or the broad guidelines are set for the UK as a whole. We have no particular preference for either – but ‘broad guidelines’ should give LEPs and devolved administrations significant discretion on how to run their own programmes.”

With the objective being that the UKSPF will be ‘cheap to administer, low in bureaucracy’, the IED outlined the steps that would need to be taken to meet this remit. “This is best delivered by a national framework: simple LEP-based applications, payment in arrears of activity, and an audit covering some simple key measures should be the starting point,” Nigel explained. “The basic issues to cover are (1) a strategy for the funding; (2) a programme of activities that can deliver outcomes against the strategy; (3) applications that demonstrate a clear ability to deliver; (4) payment in arrears of programme activity in order to avoid fund mismanagement; and (5) an audit to measure against key measures. The programmes and projects should be monitored and evaluated by an independent audit for governance and simple output measurement which will need to be sliced from the overall fund to avoid self-management or for recipients to appoint their own auditors.”

Full details of the UKSPF will be announced after a public consultation later this year. “The IED supports the Northern Metro Mayors in their call to be involved in the consultation on the Shared Prosperity Fund,” Nigel added. “The loss of EU Structural Funds without a satisfactory replacement and the lack of clarity around local authority funding in the future threatens to create a double impact for all the UK’s regions.”

-ENDS-

For further information please contact Phil Smith, Institute of Economic Development PR consultant, on 01778 218180 / 07866 436159 / phil@philsmithcommunications.co.uk.

Notes to editors:

The Institute of Economic Development (IED) is the UK’s leading independent professional body representing economic development and regeneration practitioners. Established over 30 years ago, the IED's key objective is to represent the interests of economic development practitioners and ensure their views are widely expressed and noted. The IED is committed to demonstrating the value of economic development work for local and regional communities; the pursuit of best practice in economic development and the attainment of the highest standards of professional conduct and competence.